Econ 232 Exam 2

Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?

D. All of these are identified as causes of business cycle changes.

Which of the following transactions would be included in GDP?

D. Peter buys a newly constructed house.

In the treatment of U.S. exports and imports, national income accountants:

D. add exports, but subtract imports, in calculating GDP.

In calculating the GDP national income accountants:

D. add increases in inventories or subtract decreases in inventories.

Given the annual rate of inflation, the "rule of 70" allows one to:

D. calculate the number of years required for the price level to double.

The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are:

D. capital goods and durable consumer goods.

Rising per-unit production costs are most directly associated with:

D. cost-push inflation.

A recession is defined as a period in which:

D. real domestic output falls.

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. As a result:

C. the official unemployment rate will remain unchanged.

The phase of the business cycle in which real GDP is at a minimum is called:

C. the trough.

Net exports are negative when:

A. a nation's imports exceed its exports.

According to the Bureau of Labor Statistics, to be officially unemployed a person must:

A. be in the labor force.

A nation's gross domestic product (GDP):

A. can be found by summing C + Ig + G + Xn.

The relationship between the size of the negative GDP gap and the unemployment rate is:

A. direct.

Economic growth is best defined as an increase in:

A. either real GDP or real GDP per capita.

Which of the following best defines disposable income?

A. income received by households less personal taxes

Which of the following is the largest contributor to the growth of labor productivity in the United States?

A. technological advance

Labor productivity is defined as:

A. total output/worker-hours.

A large underground economy results in an:

A. understated GDP.

Nominal GDP is adjusted for price changes through the use of:

C. the GDP price index.

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of:

B. Okun's law.

Under what circumstances do rates of economic growth understate the growth of economic well-being?

B. Product quality has improved.

The value added of a firm is the market value of:

B. a firm's output less the value of the inputs bought from others.

The phrase "too much money chasing too few goods" best describes:

B. demand-pull inflation.

Transfer payments are:

B. excluded when calculating GDP because they do not reflect current production.

Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B. Kyle will be considered as:

B. frictionally unemployed.

The natural rate of unemployment is the:

B. full-employment unemployment rate.

GDP is the:

B. monetary value of all final goods and services produced within the borders of a nation in a particular year.

Strong property rights are important for modern economic growth because:

B. people are more likely to invest if they don't fear that others can take their returns on investment without compensation.

Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:

B. structural unemployment.

Other things equal, which of the following would increase the rate of economic growth, as measured by changes in real GDP?

C. An increase in the size of the working age population.

Which of the following institutional arrangements is most likely to promote growth?

C. Unrestricted trade between nations.

The type of unemployment associated with recessions is called:

C. cyclical unemployment.

The number of years required for real GDP to double can be found by:

C. dividing 70 by the annual growth rate.

Which of the following best measures improvements in the standard of living of a nation?

C. growth of real GDP per capita

The presence of discouraged workers:

C. may cause the official unemployment rate to understate the true amount of unemployment.